No….It’s not April Fool’s day….
Small businesses brace for massive layoffs in California for the service industry, particularly for small business owners such as restaurants and service related businesses. California is being slowly dismantled by the Governor…Gavin Newsom, who received cheers and praise for his $4/hr hike in the minimum wage for workers at a public meeting.
For many, this means a 25% raise.
The new state minimum uniquely focuses on a particular segment, fast food, affecting some of the country’s biggest chains, including McDonald’s, Starbucks, Subway and Pizza Hut.
It’s a big win for cooks, cashiers and other fast-food workers – some of the lowest-paid jobs in the U.S. – whose wages have been growing at a faster clip since the pandemic, after decades of stagnation.
California is one of the country’s most expensive states; about half a million people are estimated to work in fast food, mostly women, immigrants and people of color. Many live below the poverty line.
Sandra Jauregui from Sacramento is counting down the days to her first bigger paycheck in two weeks. After 18 years working at several Jack in the Box franchises, her pay will jump from $17.50 to $20. That means she could be bringing home another $120 each paycheck.
“It’s super great,” says Jauregui, 52, speaking in Spanish. “At the very least it’ll give me some breathing room … and make it easier to pay the rent and other bills.”
But the dramatic pay raise has also touched off a heated debate about the impact on local businesses. Smaller franchise restaurant owners warn they’ll have to raise prices, reduce worker’s hours, cut jobs or even close shop.
California’s pay hike is a result of a contentious deal struck by labor leaders, including the large Service Employees International Union, and fast-food companies last year. The new wage law applies to fast-food chains with at least 60 locations nationwide, with exemptions for some bakeries and smaller fast-food outposts inside grocery stores, airports and other venues.
Several fast-food executives have suggested prices would go up 2.5% to 3.5% to offset higher wages; Jack in the Box, Starbucks, McDonald’s and Chipotle have all warned of upcoming price hikes. That’s on top of price increases many restaurants have been rolling out for months. The cost of eating out has stubbornly inched higher even as inflation has cooled elsewhere.
Other chains plan to speed up their use of automation, including kiosks and robots. A major Pizza Hut franchisee cited the wage hike as the reason for layoffs of more than 1,000 delivery drivers this year, in a switch to apps like Uber Eats and DoorDash that pushes more delivery fees onto shoppers.
Many consumers began voicing their concerns about price increases at Fast Food Restaurants where the quality of the service or the food showed no bearing at all after the increase. Currently across the country, menu items drastically vary and the profit McDonalds has made is reflected in these increases.
Whether you order a McFlurry, a Big Mac, or something off the value menu, you’ve probably noticed that McDonald’s prices are going up. And your eyes (and wallet) aren’t deceiving you—fast food is getting increasingly more expensive.
McDonald’s revenue has surged beyond initial predictions, with the chain making a whopping $6.69 billion in Q3 of last year. McDonald’s executives have credited “strategic menu price increases” for their high profits.
And customers are not having it. Over the past year, there’s been a swelling backlash over the chain’s price increases. A post on X from July 2023 shared photos of a McDonald’s menu in Darien, Connecticut, where a Big Mac meal cost nearly $18, leading to customer outrage. And just this week, as a response to the backlash, McDonald’s CEO Chris Kempczinski said the chain will focus on affordability in 2024.
In that area of the country, a family of 4 with children approaching the teen years pays $75-$85 for a visit to McDonalds. And I can tell you, that if I lived there, McDonalds would be the last location I would go to eat out with my family….sorry.
